formulation corporate strategy
Introduction to Strategic
Management
Lecture 8:
Strategy Formulation:
Corporate Level Strategy
Reference: Henry “Understanding Strategic Management”,
Chapter 8
Lecturer: Mathew Teale
Facilitator: Michelle Thong
Learning Objectives
After studying this topic you should be able to:
• Explain what is meant by corporate strategy;
• Assess the effectiveness of different growth strategies • Evaluate related and unrelated diversification strategies • Assess the use of portfolio analysis
• Explain the role of corporate parenting in creating value • Discuss strategy evaluation.
Corporate Level Strategy
What is Corporate Strategy?
Defines the scope of the different industries and markets the organization competes within in order to achieve its organizational purpose
“What business or businesses should we be in?”
“How should we allocate resources across different businesses?”
Corporate parenting
Corporate parenting is concerned with how a parent company adds value across the businesses that make up the organization Corporate parent refers to all those levels of management that are not part of customer facing and profit run business units in multi-business companies Growth Strategies
According to Ansoff (1965) organizations can pursue four different growth strategies:
Market penetration
Increase market share in your existing markets using your existing products Market development
Entering new markets with your existing products Product development
Developing new products to sell in your existing markets
Diversification
The first of these is an expansion of an existing business but the others probably involve new businesses.
Developing new products to serve new markets
Growth Strategies
Figure 8.1 Ansoff’s Growth Vector Matrix (1965)
Types of Diversification
Related Diversification
Entry into a related industry in which there is still some link with the organization’s value
Management
Lecture 8:
Strategy Formulation:
Corporate Level Strategy
Reference: Henry “Understanding Strategic Management”,
Chapter 8
Lecturer: Mathew Teale
Facilitator: Michelle Thong
Learning Objectives
After studying this topic you should be able to:
• Explain what is meant by corporate strategy;
• Assess the effectiveness of different growth strategies • Evaluate related and unrelated diversification strategies • Assess the use of portfolio analysis
• Explain the role of corporate parenting in creating value • Discuss strategy evaluation.
Corporate Level Strategy
What is Corporate Strategy?
Defines the scope of the different industries and markets the organization competes within in order to achieve its organizational purpose
“What business or businesses should we be in?”
“How should we allocate resources across different businesses?”
Corporate parenting
Corporate parenting is concerned with how a parent company adds value across the businesses that make up the organization Corporate parent refers to all those levels of management that are not part of customer facing and profit run business units in multi-business companies Growth Strategies
According to Ansoff (1965) organizations can pursue four different growth strategies:
Market penetration
Increase market share in your existing markets using your existing products Market development
Entering new markets with your existing products Product development
Developing new products to sell in your existing markets
Diversification
The first of these is an expansion of an existing business but the others probably involve new businesses.
Developing new products to serve new markets
Growth Strategies
Figure 8.1 Ansoff’s Growth Vector Matrix (1965)
Types of Diversification
Related Diversification
Entry into a related industry in which there is still some link with the organization’s value